tv [untitled] October 18, 2012 9:30pm-10:00pm EDT
that's. i am asked guys are welcome to the kaiser report. and go no calling plan to save the world yes ben bernanke bubble the clown spoke in japan last weekend claiming currency wars are good for you and gideon gono aka god of the clown bubbles counterpart in zimbabwe is that what it is twenty twelve mid term monetary report and it's wearing a big red nose and floppy shoes stacy herbert well we can't talk
about central banking clowns without first referring to william bonds i are created specifically for this as you see this is go go go no i'm bobo benny goes on the left and he's wearing and i love why mark button and bobo aka ben bernanke he's on the right with print on his forehead yes i think the markets are beginning to suss out what happens when the central bankers expand their balance sheets. and perpetuity eventually there's going to be a problem as you mentioned ben bernanke he was in japan and spoke this past weekend but also the head of zimbabwe's central bank explains q e three yes gideon gono was out with the reserve bank is involved he's mid-term two thousand and twelve monetary policy statement and he mentioned that you know he goes back in time and sets out why printed so much money there and he says quote negative developments
threaten to bring the country social service system to halt thereby further impoverishing this isn't bob wayne people max this reminds me of what they did to the u.s. congress was they went to congress and they said let's see what representative brad sherman said at the time the only way they can pass this bill is by creating. in sustaining a panic atmosphere that atmosphere is not justified many of us were told in private conversations did if we voted against this bill on monday then the sky would fall the market would drop two or three thousand points the first day another couple thousand the second day and a few members were even told that there would be martial law in america if we voted no but this is of course suspension of the rule of law and crisis and in this case the crisis was manufactured and which which is this is we're still in
a crisis the crisis that was manufactured in two thousand and eight is still with us and there's still a suspension of law and the bankers are still declaring effect of martial law so he goes on to say it is against this background that government stepped in to save the situation through various interventions by the reserve bank of zimbabwe so with this max i want to turn to a clip of gordon brown the for the first point of recapitalisation was to save banks that would otherwise have come there. and we know only save the world save the banks ah ah. ah ah ah ah ah ah ah ah ah ah ah ah ah ah ah ah ah ah ah ah ah ah ah ah ah ah ah ah ah ah ah ah ah ah ah when you're in opposition notice that they can laugh as if they were witnessing a big giant clown with clown feet in a clown nose and gordon brown and they were laughing hysterically but when they themselves get into office and apparently when you step into ten downing street or you step into what is it sixteen hundred pennsylvania avenue you put on big floppy
clowns you know there's a lot of collusion you know for example in the u.k. they just announce their inflation figures which they say are moderating they do not include soon energy because if they did it would show the beginning of hyperinflation oh in america they did exactly the same thing so in their communication between mervyn king and bank of england and ben bernanke the federal reserve bank yes of course they're colluding along with the e.c.b. . which is in a similar game or the zimbabwe central banker and i remember those images and zimbabwe people digging through the dirt for flecks of gold to buy bread think about it well going back to it gideon gono says about his money printing he said quote these interventions which were exactly in the mold of bailout packages and quantitative easing measures currently instituted in the us and e.u. were geared at evoking a positive supply response and arrest for their economic decline so he says he's
imitating the e.u. and e.u. and the us in order to arrest economic decline i want to show a little video here and be warned that there are some flashes i think that's the grenades going off. that's true spain that's how that's that they arrested economic decline there well they have not done anything but exacerbate the crisis and those who are suffering from it are being systematically pushed off the grid and that's their solution exactly and he is honest here at the end gideon gono says despite all of this good work we did to save the world quote economic activity continued to decline progressively with inflation peaking at two hundred thirty one million percent by two thousand and eight i think he's being quite kind of there to call it inflation. inflationary
forces are again they're being locked up on this common global shadow banking system to come in central banks off balance sheet toxic waste dump where it's expanding by trillions of dollars and and euro's and yen as an effort to mask the effects of this irresponsible policy to bail out the bankers at the expense. of society at large in toll such time as the dams of the central banks explode and hyperinflation d. bases all of the paper money around the world and one cataclysmic armageddon and then of course the central bankers will be in their ski chalet testing each other about the fine jobs that they've done. and again he then goes on to list a whole list of things that happened despite his good work he said there were cash shortages acute currency shortages skills flight vibrant parallel market for goods
in foreign exchange erratic fuel supplies and demick speculative rent seeking behavior so this is as a result of his money printing his this in demick speculative rent seeking behavior so i want to turn to a headline just out from california quote are we seeing an echo housing bubble in california the low inventory low interest rate mania the psychology of buying in a perpetual bubble machine so apparently southern california home prices are up a solid twelve and a half percent max your way year with incomes being stagnant you need to ask where is this jump in prices coming from well dr housing bubble says two main places low inventory selection and incredibly low interest rates right to central bankers get together occasionally for their calm shab day smoke each other's belly button lint and they get high on the delusions of their mastery of policy meanwhile there's an echo housing bubble in california which is set to explode and set the stage for
another massive downturn in house prices which will further impair the balance sheets of these too big to fail banks in response to become even bigger to big bigger fail or bigger failing fail fail don't consolidate and they'll become even more powerful and they'll have the ability to push even more people off the grid and you have this emerging one hundred million people according to paul moore former regulator and newly thrust into poverty well that number is going to be a billion soon wanted you know the echo bubble is a well known gag by both with the clown so well these are the schools. that these chairmen tend they go to the ringling brothers and barnum bally clown school where they. learn how to walk around a floppy shoes where funny beards and you know pretend as if they have mastery over policies that they clearly don't and they support each other with bottles that you
see that's their monetary policy they've seltzer bottles and they go i'll here's your quantitative easing. you know and they do this to each other and they say since we're all wet and wet liquidity and the quality is good we're making the market says goldman sachs and we're adding liquidity says j.p. morgan you're just spritzing each other with seltzer bottles and frick and clowns so dr housing bubble looked at who actually bought these homes and it turns out the f.h.a. insured buyers bought twenty five percent of all these homes and thirty one percent were bought by all cash buyers so you only have the two ends those who are putting down less than five percent deposit and are backed by the taxpayer and the other part of the hedge funds and investors who are buying them in cash hoping to flip right you have flippers and the hedge fund market and the government. will keep interest rates low to satisfy their constituency of hedge funds and house flippers you say there's no actual middle income middle class person is buying
a home and buying a mortgage with the expectation of having a normal job and contributing in a normal way to a normal society if only speculators spent by near zero percent interest rates who work for hedge funds who are out there you know getting blasted on a daily basis on bath salts and cheap wine. but again this is a policy created by both the clown ben bernanke now goto the clown the central bank had in zimbabwe getting go now admits to it he says because of his policies speculation and rent seeking behavior has become endemic so it's ingrained in the population they've been trained to expect the squirting flower from ben bernanke yeah and you know and when the. when the u.s. economy collapses in years on collapses and they need to roll up both of these economies into a new global central bank get gideon gono to be the global central banker and he can take that clown act global and then is
a solution will be while we've got one hundred trillion dollars of bad debt we're partnering with seta they search for extraterrestrial intelligence out of universities in california to find parallel dimensions with populations on sr planets who will bail us out here on planet earth that says planet it's called seti and i think they've just sat down because the government has pulled funding but maybe going to the clown has. sent down on the clown up in space. and instead of jumping off the ledge at twenty four miles up just keep going with that looking for bailout money ok next headline maxa term and ben s. bernanke at the challenge of the global financial system risk and governance under evolving globalization the high level summer sponsored by bank of japan international monetary fund tokyo japan u.s. monetary policy and international implications so max this is ben bernanke bono the clown speaking in japan and he said he admitted finally that we're basically in
a currency war and he said but and that he's hearing a lot of complaints from emerging economies like brazil or china about the u.s. quantitative easing of money printing and he said but any cost for emerging economies should be set against the very real benefits of those policies and he's saying the benefits are we save the world and if it weren't for us printing you know basically it would be a whole lot worse for you in the emerging economies right and jim jones in guyana told the people to drink the kool-aid laced with cyanide because they were saving the world by killing themselves and this is bernanke his message drink the policy kool-aid of what i'm saying and kill yourself the result will be a much better world station over thanks so much for being on the kaiser report thank you max all right stay tuned for the second half i'll be speaking to clown slayer jim rickards.
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welcome back to the kaiser report out max kaiser time now to turn to jim records a fund manager tangent capital and author of this blockbuster best seller around the world currency wars i must own book to understand what's going on in the global economy today jim rickards welcome back to the kaiser report thank you max nice to be here all right jim u.s. federal reserve chairman ben bernanke he's spoken to pay. on sunday it's actually acknowledge that the us is a gates in a currency war now you tweeted that quote bernanke speech is fed holding a gun to its own ad and saying nobody dollar gets it right operate sure thing this is actually it's news in a start is it two different ways the congress who has been going on since two thousand and nine this was really concocted at the g twenty summit in pittsburgh in september of two thousand and nine announced by the pres of the united states in january two thousand and ten in the state of the union address but until two days
ago neither the fed or the treasury had ever admitted it publicly now finally had the chairman of the federal reserve ben bernanke be coming out and saying yes we are out to lower the exchange value of the dollar and he said all you other countries brazil korea taiwan china as the case may be got to add pressure your currencies if you don't you're going to get inflation we're going to keep printing saying my printing press is bigger than your printing press and we're going to keep printing and if you want to maintain a peg to the dollar if you want to prevent your currency from appreciating you're going to have to print so much of your own money in effect outsourcing your monetary policy to us you're going to get inflation so he's basically threatening this country is a found the speech did have a very threatening tone saying you either have to. increase the value of currency which of course lowers the dollar or suffer inflation one of the other so but to hear him talk about a publicly and explicit way is new and it's also interesting because the chairman of the federal reserve never talks about the exchange value of the dollar that's
the job of the treasury so this must have had some kind of implicit treasury approval which means geithner is on board so i think it's very significant in the fact that bernanke is sort of coming out of the closet and say yes he has a currency war and he's out to trash the dollar all right so the fed prints but these other countries particularly in asia if they want to maintain their export business they in turn must print so the inflation shows up on their shores and bypasses the us right well that's what's been happening so far what bernanke you. once he wants to in effect reimport the inflation he's sending inflation around the world through the exchange rate mechanism he wants it to come back to the united states to the fed it was or once inflation in the united states they were negative real rates that one flesh and they want to lower the value of the debt by inflating it away they want to force people into spending money if you think inflation is going to take off you're going to go out buy a car or buy a house or a refrigerator whatever it is that's what the fed wants the problem is the inflation has not been coming back to the united states we haven't had very much
inflation that's because it's showing up abroad because these other countries in brazil and china are good examples they're trying to keep their currencies low so they're printing the lowering rates and printing money absorbing these capital inflows but bernanke you say we're not going to give up you know q.e. two doesn't do it you know we're now into q e three or you know they're just going to keep printing money and buying securities of flooding the world with dollars until these countries let their currencies appreciate at that point our imports will be a lot more expensive because our dollar will be less and the inflation will come back to the states that's the goal he's not there yet the point of the speech was to basically threaten these other countries say i appreciate we're deal with the inflation earlier here in the u.k. and they just announced their inflation numbers numbers are coming down of course they exclude food and energy and this economy a-k. is mimicking a lot of what's going on in the u.k. and the u.s. can you compare the two economies that mervyn king at the bank of england ben
bernanke at the bank federal reserve bank do they have autonomy with each other or is the bank of england really an apostle an underling of the bank and the federal reserve bank and speak a little bit about the u.k. ticket well there's certainly i think the key thing max is that like minded you don't have to suppose to some kind of conspiracy or close cooperation the fact is mervyn king and ben bernanke come out of the same school the same sort of new keen c.n.n. and also the belief in the effectiveness of my. terry policy in terms of money printing and stimulus all really does is create inflation doesn't get you anywhere at the end of the day but the fact that they're pursuing the same policy mervyn king the bank of england were pursuing a more aggressive quantitative easing program than the fed was and they were doing it earlier the fed sort of catching up so they're both doing the same thing the main difference i see between the u.s. and the and the bank of england is that if the u.s. gets into some kind of difficulty if there's sort of a run on the dollar was
a confidence the u.s. has eight thousand tons of gold that they can bring out the back of the dollar if it's really in distress the u.k. of course has no significant amount to go wrote it and size the economy europe on the other hand the european central bank the european monetary system has even more gold than the united states and europe in the u.s. are well stocked with gold the u.k. is not so i see if there's going to be a currency crisis sooner than later i expect it to happen in and pound sterling partly because of quantitative easing not backed up by any gold all right i mentioned c.p.i. and here in the u.k. they call the r.p.i. and the numbers exclude energy and food you responded that well there's not much of a conspiracy here but what about this idea that governments cooked their numbers what we do know is that in the case of c.p.i. our g.d.p. every administration seems to redefine what those indexes are in redefine what those numbers are what's your view in terms of these numbers are they massaged
doesn't matter and what are your thoughts on that well it does matter because it changes expectations in the fex policy and it is you know in theory price signals are supposed to matter if you have free markets because we don't have free markets what we have is theater conducted by the fed but in a in a free market system prices are the way that people decide how to of how to invest capital how to spend capital you know one company's got a cheaper price than the other so you go to wal-mart instead of costco i mean that's the it is the supports of. price signals now when the government intervenes in the fed intervenes or central banks and he generally they distort all of that so you get misallocations of capital poor decisions or people are so uncertain they just go the sidelines i don't think the numbers are cooked in the sense i don't think any bureaucrats are sitting there actually lying terms to the output but i do think that the numbers are cooked in the sense that the inputs could be affected such so much that they. they lie about the numbers but they can manufacture the numbers by changing the inputs a good example is china china can make its g.d.p.
whatever they want to through investment they have as it's government directed the banks finance that the banks are controlled by the government and if they want to increase g.d.p. they can just go out build a train station build a high speed rail road though the highway even if you don't need it even if it's wasted capacity they can just go ahead and do it in the us of course we've got a monetary manipulation efforts to cheapen the dollar print money so there's all kinds of manipulation going on there are certainly i think it's interesting that you know we have an election coming up in a few weeks in the united states and the economy of ohio is doing significantly better than the economy of the rest of the united states well so surprise a high it was one of the major swing states probably the candidate that wins ohio will be will win the presidency so are we surprised that the so much money being poured into ohio so again it's not so much that they lie about it but they manipulated by basically changing the inputs when they change the inputs you're going to change the outputs all right jim you're my manager you've been in the
business for decades you've got a foot both in washington and in the intelligence community to some degree as well as being a very sophisticated hedge fund manager the price signals being generated you're playing a medic game you know you're looking at it in terms of the game within the game but the business is out there the businessman the mom and pop or the farmers they don't have that level of sophistication and these pricing those are failing to communicate to them what they might be doing in this environment as a or. zol they're full of fear they're not taking they're not making investments or they're hoarding cash or they're just sitting on the sidelines or they're just confused and angry what about this disconnect because you see it more and more in america and in the global society where you've got a group of folks who can decipher the maddest signal the real signal and everybody else it seems that you know be just confused and bewildered is this a growing problem is there any way to rectify this problem or my it was an exaggeration i think it's
a very important point max actually i think it's the most important problem in the u.s. economy go back to the great depression of the one nine hundred thirty s. what's always intrigued me is it's not so much what caused it but why did it left so long why does it last for ten years compared to say the depression of one nine hundred twenty which lasted eighteen months and the best analysis i've ever seen is one that said it was what economists call regime uncertainty you know policy in the hoover and the roosevelt administrations change so often the government interventions that put on price supports they take them away you know. confiscate gold try to pack the supreme court businesses just went to the silence and said i'm going to wait till this is over this same thing is going on today and you know the day after bernanke is tokyo speech we talked about that at the beginning of the interview we have doubly the president of the federal reserve bank of new york in a permanent member of the federal open market committee gave a speech that talked about this and he said you know we underestimate the duration of this you know we're not technically in a recession but growth is so slow mind houses we're in
a depression so dudley's answer is just print more money more ease work rest of easing and he says that he said with hindsight i wish we had these even more than we did that is not the problem the problem is the one we just talked about which is this regime uncertainty we don't know what's going to happen to the bush tax cuts we don't know what's going to happen to the payroll tax you know mitt romney says will repeal obamacare obama's says so keep it so you don't know what's going to happen to your health care costs so if you're a business person you're not going to commit any capital right now because you don't know you can't calculate a return so i do think this is the. biggest cause of a lack of robust growth in the u.s. economy until we get some policy certainty on taxes health care costs monetary policy we're not going to see growth we are japan we're just going to have potentially decades of low and sub par growth all right finally you mention the depression and them. now there seems to be focused attention on how the depression started how people got out of it how we got out of the united states there's three scenarios in terms of getting out of it that i would identify one would be the
keynesian spending from the government the deficit spending that work relief programs number two would be bank reform remember the entire industry was really formed and you had a securities act of thirty three and thirty four eventually and it set the stage for a more robust wall street and of course you had the devaluation of the dollar against gold which sounds like something that would in your out of your book your currency war you know you talk about it at great length of those three scenarios which one really contributed to america getting out the depression bank reform dollar collapsed or deficit spending well i would say back reform was a positive step but it really was in america economic move it was a regular term so separating commercial banking investment banking was a positive step it's something we should do today by the way we should undo the repeal glass steagall which happened in one thousand nine hundred nine during the clinton administration so that's a good thing but by itself it's not enough as far as devaluing from gold the
problem with the one nine hundred twenty s. and the one nine hundred thirty s. is that gold actually was undervalued the should have had a much higher value so that was probably just an adjustment but you didn't have to confiscate the people's goal which is what roosevelt did you could have had a more honest upward revaluation the price of gold just to get to it was the non equilibrium price will differ from where we are today the kids in policy did no good always try to over and over that's not what got us out of the great depression the best theory i've seen is that actually if you take out war spending obviously the economy and industrial production picked up in one nine hundred forty one one hundred forty two while we were fighting world war two and spending enormous amounts of money deficit spending to do that increasing the debt but that was the extensor you had to you had to do that but the economy didn't really get on to a permanent growth footing until the one nine hundred forty six after. the war when the republicans took over congress and lower taxes that's what did the trick so if you factor out the war spending we were not out of the great depression as late as one thousand nine hundred six and it was those tax cuts of forty six that really
set us off on an excellent growth path with the one nine hundred fifty s. and on into the one nine hundred sixty s. jim records are out of time dang it but anyway at the back on again soon thanks so much for being on the kaiser report thank you max all right that's going to do it for this edition of the kaiser report with me max kaiser and stacy everett and i guess jim records author of the seminal and must own book currency wars like imax guys are saying oh yeah and office i mean email at kaiser reported r.t. t.v. dot are you by all. the world. science technology innovation all the rest of the humans from around russia we've got the future covered.